Prerequisite: Mathematics 135

Message from the College of Business and Economics (CBE):

The main purpose of the degree program at the College of Business & Economics (CBE) at Cal State Fullerton is to provide you with the knowledge and skills that prepare you for a successful career in business. In order to assist us in achieving this goal, we will use a number of assessment tools to track your progress through the CBE curriculum. Please expect to participate in CBE assessment activities in several of your courses while at the CBE. As you do so, you will assist us in identifying our program's strengths and weaknesses as well as areas for potential improvement. In other words, you are making an important investment in the value of your degree.

Introduction:

The primary objective of this course is to develop the complete set of tools required for a firm's manager to make well informed, responsible and efficient business decisions in an increasingly dynamic world.' To this end, the course envisages integrating the traditional microeconomic analysis of standard topics -- demand and supply, production and costs, market structure and market failures, factor market interactions, antitrust and regulation -- with the treatment of more current and managerially important topics such as developing effective performance-evaluation systems and compensation plans, assigning decision-making authority among employees, or managing transfer-pricing disputes among divisions.

However, knowledge of the underlying economic framework within which to analyze managerial problems is by itself not enough for a manager in today's fast changing business environment.' A broad understanding of the perspectives that form the context for business is essential.' For instance, employing cheap child labor in production plants located in developing countries is not only ethically wrong, it can also lead to severe backlash effects over time that adversely affect the fortunes of the manager and his/her firm.' Similarly, the increasingly global nature of competition in conjunction with the rapid pace of technological change throws up a number of knotty issues.' Should renewal of China's most favored nation (MFN) trading status (now referred to as normal trade relations (NTR)) be made conditional upon evidence of significant progress in the area of human rights?' How will encryption software firms be affected by federal restrictions on exports of such software stemming from concerns about national security?' What lessons should managers draw from the European Union's decision to scuttle General Electric's proposed acquisition of Honeywell despite the deal having already received antitrust clearance from the Federal Trade Commission?' How should firms reinvent themselves to cater to the growing demographic diversity in the marketplace reflected, for instance, in developments such as the increasing financial clout of the Hispanic community?' In view of these kinds of issues, it becomes clear that a business student's education is incomplete without adequate exposure to the following perspectives: (i) Ethical issues, (ii) Global issues, (iii) Political, social, legal, regulatory, and environmental issues, (iv) Technological issues, and, (v) The impact of demographic diversity on organizations. '

In accordance with the above, Intermediate Business Microeconomics aims at meshing the bread and butter tools of microeconomic analysis with a well rounded appreciation of the important perspectives that form the business environment in the contemporary world.'

The course text is:

Managerial Economics & Business Strategy, 9th Edition: By Michael Baye & Jeffery T. Prince, ISBN 978-1-259-29061-1

There will be two hourly exams and a comprehensive final exam. Exam points are listed below. In addition you may earn up to additional 5 percent (15 Points) extra credits which will be given in class. Please check for your final exam date and time posted on Fall 2017 Final Examinations    http://records.fullerton.edu/registration/finalexaminations.php. Scan sheets are required for all exams and quizzes. Please purchase Scan sheet called "ParScore^TM, Test Form 882E. You will not be permitted to take any of the exams if you do not have the correct Scan sheet.

* A total of 5% extra credit points can be earned by completing classroom activities.

Grade Distribution

270 - 315	A
240 - 269	B
210 - 239	C
180 - 209	D
Below 180	F

Study Tools:

• The class website (through my.fullerton.edu) will have announcements, grades, quizzes, my lecture slides, etc.. Please check this website weekly. In particular, after reading the book chapter students should review the instructor's PowerPoint slides in Course Documents and assigned questions at the end of each chapters. Then students should do the required chapter homework and review other handouts, followed by a timed quiz in the Assignments section.

• The class textbook website    http://highered.mcgraw-hill.com/sites/0073523224/information_center_view0/provides flashcards, a Powerpoint presentation of chapters, and a free quiz for each chapter. Click on the student edition**Also: each chapter now has a video of the steps for a demonstration problem from each chapter.

• The Connect website (see inside book cover) provides access for your required homework and extra credit.
  
  
  Connect: Registration

Connect: Power Point Presentation

 

http://connect.mheducation.com/class/m-rahmatian-econ315fall2017

 

Qualifying Mathematics Test

Word Document

PDF  

Learning Outcomes for Economics 315

Overview:    After taking this course, students should understand how to apply economic theory and methods to managerial decisions. They should be able to link external market forces to business output and pricing decisions, know how to apply marginal analysis to discrete business choices, and recognize the market structure in which a business operates and its effects on decision making. Students should be able to:

1. Recognize the difference between opportunity and accounting costs and understand the impact of opportunity costs on managerial decision making.
2. Understand the importance of converting future values to a present value and apply present value tools to calculations of the value of the firm, project choice and other applications.
3. Distinguish marginal impacts from total impacts and use marginal analysis for the determination of an optimal choice variable in a discrete and continuous setting.
4. Identify the factors in consumer demand and producer supply.
5. Determine a predicted market equilibrium graphically and algebraically.
6. Clarify the welfare impacts to society of a market equilibrium.
7. Determine the direction of market equilibrium changes following governmental interventions in a market.
8. Determine the direction of market equilibrium changes following external changes in a market (comparative statics).
9. Explain the concept of own-price and other elasticities.
10. Calculate elasticities using point estimates and functional formulas.
11. Identify the factors affecting an own-price elasticity for a firm's product.
12. Use own-price elasticity concepts to determine the optimal price/ quantity combination to maximize a firm's total revenue.
13. Obtain elasticities using different types of demand functions.
14. Analyze demand and supply function coefficients to analyze the nature of a good and its market impacts.
15. Clarify the relationship between inputs and outputs in a production function.
16. Distinguish the short-run and long-run frameworks for planning.
17. Calculate short-run measures of efficiency and use these measures to determine the optimal amount of a variable input for a profit-maximizing firm.
18. Conceptualize the long-run technology choice of a firm to minimize costs to achieve production goals.
19. Calculate the associated costs of input usage in the short and long-run.
20. Determine the optimal scale of firm production in relation to average costs.
21. Calculate concentration statistics and other ratios which identify the different types of market structure in which a firm operates.
22. Understand how market structure impacts a firm's pricing and quantity decisions.
23. Calculate the optimal quantity and pricing decisions of firms in different market structures (perfect competition, monopoly, monopolistic competition) to achieve profit maximization.
24. Apply the shutdown analysis to firms operating with short-run losses.
25. Use the tools of marginal analysis or game theory to determine pricing and quantity strategies for firms operating in an oligopolistic market structure.

ECONOMICS 315 AND THE B.A. IN BUSINESS ADMINISTRATION

How does this class relate to others you will take in your B.A. in Business Administration? Below you will find a chart listing concepts covered in this class and how they relate to other subjects covered in your other classes.

ECON315 Intermediate Business Microeconomics
Key Concepts	Link to Core
1	Key Concept 1: Firm Goals, Choices & Constraints Key Concept 2: Opportunity (Implicit) Costs Vs. Accounting (Explicit) Costs Key Concept 3: 5 Forces affecting Firm Outcomes	Accounting 201B
2	Key Concept 1: Net Present Value, Time Value Money Key Concept 2: Project Analysis/Value of the Firm Key Concept 3: Math Review (calculus, graphs)	Finance 320
3	Key Concept 1: Optimization using table data and functions Key Concept 2: the Role of Marginal Analysis Key Concept 3: Review	n/a
4	Key Concept 1: Demand analysis using table and function data Key Concept 2: Supply analysis using table and function data Key Concept 3: Market Price and Quantity Equilibrium	n/a
5	Key Concept 1: Forecasting sales changes given demand shift factors Key Concept 2: Forecasting output changes with supply shift factors Key Concept 3: Impact of Govt. Price Interventions	ISDS 361A
6	Key Concept 1: Own-price elasticity of consumer responsiveness Key Concept 2: Use of elasticity to maximize total revenue Key Concept 3: Calculation and use of other elasticities	Marketing 351
7	Key Concept 1: Distinguishing short vs. long-run firm production choices Key Concept 2: Productivity measures and choice of a variable input in the short-run Key Concept 3: Optimal mix (or location) of inputs for cost-minimization in the long-run	Management 339
8	Key Concept 1: Engineering production relationships (functions) Key Concept 2: Costs (fixed and variable) derived from use of inputs Key Concept 3: Choices of scale (sales level) and unit costs	Accounting 201B
9	Key Concept 1: Definition of Transaction Costs Key Concept 2: Methods and Choice of Input Provision Key Concept 3: Different wage packages for incentives	Management 246
10	Key Concept 1: Profit Maximization Analysis Key Concept 2: Application of Profit Maximization in Perfect Competition Key Concept 3: Relevant Costs and Firm Shutdown Decisions	n/a
11	Key Concept 1: Applications of Profit Maximization in Monopoly Key Concept 2: Barriers to Entry and Market Power Key Concept 3: Monopolistic Competition, Advertising	Marketing 351
12	Key Concept 1: Profit Maximization in Oligopoly Settings Key Concept 2: Game Theory applied to 2-firm actions Key Concept 3: Summary of 4 Market Structures	n/a
13	Key Concept 1: Pricing Strategies for Firms w/ Market Power Key Concept 2: Levels of Price Discrimination Key Concept 3: Two-part pricing, Block pricing, Bundling	n/a

OUTLINE

I. Introduction, Market and Prices: Chapters 1-2

A. Key Concepts

1. Firm's objectives
2. Fundamental Economic Concepts
3. Marginalism
4. Opportunity Cost
5. Optimization
6. Demand and Supply Analysis
7. Elasticities

II. Producers, Consumers, and Competitive Markets: Chapters 3-6

1. Profits as Motivator
2. Alternatives to Profit Maximizing
3. Non-Profit Organizations
4. Technology and Inputs
5. Short and Long-run Costs
6. Estimation of Cost Functions
7. The Learning Curve

III. Market Structure and Competitive Strategy: Chapters 7 - 11

1. Perfect Competition
2. Monopolistic Competition
3. Monopoly and Monopsony
4. Advertising
5. Asymmetric Information Exchange
6. Optimal Mark up Pricing
7. The Regulatory Process
8. Public Utilities
9. Oligopolistic Market Solution
10. Oligopolistic Rivalry and Game Theory
11. Cartel and International Perspective

IV. Information, Market Failure, and the Role of Government: Chapters 12 - 14

1. Pricing Practices and economic efficiency
2. Regulatory Constraints
3. Externalities and Market failure
4. Markets with Asymmetric Information

COURSE INFORMATION

1. Students are responsible for EVERYTHING said in class, including material not covered in the book, exam dates and any changes in the reading assignments. If you miss all or part of a class, be sure to find out from another student everything that transpired.

2. Students are expected to arrive in class before the start of the lecture. If for any reason you are late for the class, you must make every attempt to avoid disturbing other students while making your entry. ' If you are unable to do so, either avoid entering the class or    ask for assistance!    If you are more than 10 minutes late, you may attend the class however, you are not allowed to take the Extra Credit.'    Furthermore on the exam days, after completion of your exam, please leave the class quietly without disturbing other students in class.

3. Attendance at exams are mandatory. The professor must be notified    in advance    of any unusual problem, which makes a student's taking of an exam at the scheduled time impossible. Only rarely are such excuses accepted, in which case a prompt make-up exam will be given. Excuses must be in writing on official letterhead stationery (that of a doctor, a funeral director, etc.) All excuses must have an official phone number, which will be called for routine verification of the excuse.

4. Prerequisite for ECON. 315: Introductory Macroeconomics (201), Introductory Microeconomics (201), and Mathematics (135).

5. Incomplete is virtually never given.

6. No exceptions are made to the course grading system stated on the syllabus.

7. No exceptions are made to the final exam date mandated by the university.

8. Withdrawal policy is based upon rules mandated by the university policy.

9. Any Academic Dishonesty by the students will be treated according the university policy stated in university catalog. Please review the link below:

http://www.fullerton.edu/senate/publications_policies_resolutions/ups/UPS 300/UPS 300.021.pdf  

Optimization

SELECTED "EXERCISES" AT THE END OF THE CHAPTERS
Chapter 1: 1, 2, 6, 8, 9, 12, 14 and 15	Chapter 8: 1, 2, 3, 4, 6, 8, 9, 13, 16, and 19
Chapter 2: 1, 3, 4, 6, 8, 11, 13, 15 and 17	Chapter 9: 1, 2, 5, 6, 9, 11, 15 and 17
Chapter 3: 1, 2, 4, 9, 11, 14, and 15	Chapter 10:
Chapter 4:	Chapter11: 2, 3, 5, 6, 7, 11, 15 and 16
Chapter 5: 2, 3, 4, 6, 7, 10, 12, and 17	Chapter 12:
Chapter 6: 1, 3, 5, 6, 8, 13, 16, 18 and 19	Chapter 13:
Chapter 7: 1, 2, 3, 4, 9, 13, 17 and 19	Chapter 14: 1, 2, 3, 5, 6, 11, 13 and 15

Please check the Titanium

Please check the Titanium

Ford & GM Example

Optimization